Jeremy Quin: With permission, I should like to make a statement on the future defence and security industrial strategy. Last November, the Prime Minister announced he was increasing spending on defence by £24 billion over the next four years. Last week, the Government published their conclusions from the integrated review, the most comprehensive survey since the end of the cold war.
Yesterday, my right hon. Friend the Secretary of State for Defence set out what amounts to the biggest shift in defence policy for a generation—a policy that will see us reinvesting, re-equipping and reorganising to face the threats of tomorrow. In doing so, he reconfirmed this Government’s commitment to spend more than £85 billion over the next four years on equipment and support for our armed forces. That reflects the fact that our armed forces will need to be present and persistent, and agile and adaptable in an ever-evolving threat landscape. That is why it almost goes without saying that the most important thing in defence procurement is ensuring our people have the right capability, at the right time, to preserve our national security.
Our success hinges on a productive relationship with industry. The UK’s defence and security industry is world-renowned. Ministry of Defence spending in the sector secures more than 200,000 direct and indirect jobs across the UK, while the industry’s success as the world’s second largest global exporter of defence goods and services supports many thousands more. The sector provides our deterrent and underpins our critical national infrastructure. Through the MOD’s £300 per capita spend across the UK, it generates valuable skills and technology. The security industry alongside it, of more than 6,000 companies, is a font of enterprise and entrepreneurship. Last year, cyber-security firms raised more than twice as much investment as they had in 2019.
Overall, defence and security is one of the binding elements of our successful Union. Our world-class workforce builds everything from submarines to Typhoons right across the country. We have frigates made in Scotland, satellites in Belfast, next generation Ajax armoured vehicle technology in Wales and aircraft production in the north of England. We must never take for granted these industries, the skills they develop or the contribution they make to UK resilience, operational capability and prosperity. We must do more to recognise explicitly the social value that Government procurement can generate throughout the Union.
To ensure that we continue to have onshore capabilities that meet our needs and continue to generate prosperity long into the future, I am today publishing our defence and security industrial strategy. I am pleased to say the strategy is a detailed policy document, and rightly so, but its significance can be summed up in a few sentences. It signals a shift away from global competition by default towards a more flexible, nuanced approach. It provides, and we will continue to provide, greater clarity about the technology we seek and the market implications long before we launch into the market, allowing companies to research, invest and upskill. It identifies where global competition may not be compatible with our national security requirements and, at last, it regards industry as  a strategic capability in its own right—an industry we must devote our attention to if we are to maintain our operational independence.
Today, I want to highlight three themes in particular that are at the heart of DSIS. The first is our ability to work together to generate growth and prosperity across the Union. DSIS sets the framework for greater integration between Government, industry and academia. It will see us working more closely, too, with top-flight research and those companies, great and small, that make this country so celebrated in the field of innovation. Through a better understanding of requirements, companies will be able to seize opportunities, pool resources and upskill to deliver cutting-edge capability onshore in the UK.
That is a framework that works. Our future combat air system shows that the principles of DSIS are already delivering. A fundamental strategic decision for this country, it will ensure UK air power continues at the cutting edge as it evolves through this decade and beyond. We are investing more than £2 billion over the next four years in this British-led international collaboration, safe in the knowledge that it will leverage hundreds of millions of pounds of investment from the corporate sector. These future systems will not just build technology but develop skills and create opportunity for 2,500 apprentices over the next five years. “Generation Tempest”, as we have dubbed this cohort of future talent, will, in turn, create extraordinary export opportunities with our friends and allies overseas. We are investing more than £2 billion over the next four years in this British-led international collaboration, safe in the knowledge that it will leverage hundreds of millions of pounds of investment from the corporate sector. These future systems will not just build technology but develop skills and create opportunity for 2,500 apprentices over the next five years. “Generation Tempest”, as we have dubbed this cohort of future talent, will, in turn, create extraordinary export opportunities with our friends and allies overseas.
Of course, competition remains critical in many areas. Even where we have already developed close partnerships at the prime level, we will expect to see productivity incentivised and innovation encouraged. Across all our national security procurement, DSIS will mean more transparency, more clarity of our requirements and a more co-operative approach to business. We are replicating this joint approach in other sectors: ensuring that we deliver our strategic imperatives, from nuclear to crypt-key; complex and novel weapons; and new opportunities that are opening up in areas such as armoured vehicles as we develop a new land industrial strategy.
Critically, our spending on FCAS reflects an increased willingness to invest in research and development. Overall, we are investing more than £6.6 billion in R&D over the next four years. That will support next-generation capabilities, from space satellites and automation to artificial intelligence and novel weapons. The message that our R&D spend sends, coupled with the clear direction of travel we are providing about our future priorities, will give businesses the confidence to invest.
That brings me to another key element: we must forge stronger international partnerships. By doing more R&D, we will keep ourselves current and encourage the very best from outside these shores to collaborate with UK companies. I have already mentioned FCAS as one example of how a UK-led collaboration with allies and partners can work, but we see it elsewhere in other air  programmes, such as the UK’s significant contribution to the US F-35 stealth fighter or our ongoing investment in Typhoon with our European partners. Time and again, we see how international collaboration can deliver the very best kit for our people.
As part of this international emphasis, DSIS also puts a renewed focus on exports. As we demand more of industry to meet our requirements, so we need to offer it more support to win abroad and deliver economies of scale. It is because of our recent investments in maritime that I am the first Minister for Defence Procurement in a generation to talk about selling our state-of-the-art ship designs to our close friends in Australia and Canada, in respect of the Type 26, and, we hope, to others around the world. Notably, our Type 31 is a frigate that will be multi-purpose and has been specifically designed with the needs of international partners in mind.
Our integrated review seeks to capitalise on this new export-led approach, not only setting out our plans to deliver the eight Type 26s and five Type 31s but highlighting our investments in next-generation naval vessels, including Type 32 frigates and fleet solid support ships. We believe it is time to spark a renaissance in British shipbuilding. That is why we are today changing our naval procurement policy to make clear our ability to choose to procure warships of any description here in the UK.
The third and final theme of DSIS that I want to highlight is achieving real reform in how we procure. Some of this is about driving pace and better working inside the MOD to deliver capabilities at the speed of relevance, but it is also about changing how we interact with our suppliers, reforming the Defence and Security Public Contracts Regulations 2011 to focus more on innovation and increasing the agility of acquisition. We are adopting the social value procurement policy to ensure that wider qualities such as skills creation or supply chain resilience are explicitly taken into account in tender evaluation. That will be mandatory under DSPCR from 1 June.
We will be doing more to incentivise continuous improvement in single-source procurement. We want to ensure that the supply chains of our primes are constantly open to innovators, and we want to ensure that our fantastic small and medium-sized enterprises—the lifeblood of defence—get a fair chance when it comes to winning work, not least from inward investors whose interest and investment in the UK we will continue to welcome.
DSIS signals a step change in our approach to the defence and security industrial sectors. Ultimately, DSIS will make a huge difference to our nation’s defence. It will help retain onshore critical industries for our national security and our future. It will help us develop advanced skills and capabilities. It will help us realise the Prime Minister’s vision of the UK as a science superpower. With defence procurement benefiting every part of our Union, it will help galvanise our levelling-up agenda, creating a virtuous circle whereby the support we provide to those who defend and protect us becomes a catalyst that propels jobs, skills and prosperity in every corner of our United Kingdom. I commend this statement to the House.

Chris Skidmore: I welcome this Bill. As the former Science Minister who ushered in this concept of the UK ARPA—now ARIA—in the 2019 Conservative manifesto, I am delighted that the introduction of this Bill so early in the Parliament demonstrates the Prime Minister’s key determination that research and development will be a priority as we look to build global Britain on the back of recovery from the pandemic.
The Bill needs to be placed in the context of the uplift in research and development spend that has been spoken about, from the £9 billion per annum that we have spent in the past to £22 billion by 2024-25. To put that in context, ARIA will represent just 1% of total research spending in the period it is set up for, over five to 10 years. That is obviously due to our commitment to spend 2.4% of GDP on research and development by 2027, and we need to look at how we achieve that by creating multi-annual financial budgets. We know that ARIA will have £800 million over a five-year period, and that is incredibly welcome. We need that certainty and stability for the rest of the R&D sector to be able to plan ahead and devise research partnerships.
A number of Members have spoken about the current insecurities regarding the Horizon Europe subscription. There were plenty of insecurities when it came to seeing whether we would be an association member of Horizon Europe in the first place, yet we crossed that line. I am in no doubt that these issues will be resolved within the appropriate timescale to provide certainty for the science and research sector when it comes to plugging funding shortfalls, but in the future we should learn the lessons by creating multi-annual, sustainable, long-term budgets that stop us reaching this stage in the first place.
I believe that the Bill designs the right structure for ARIA, with that 10-year certainty that it will exist, free from ministerial whims and able to plan ahead. It is right that the Bill strikes the tone and balance between, necessarily, independence and autonomy, as well as providing the right flexibility to prioritise discovery-led research. There has been some discussion on Second Reading today around whether we should be taking a mission-oriented approach or whether we should be looking for moonshots for ARIA, but that is fundamentally  to misunderstand the purpose of creating an organisation that will prioritise disruptive innovation. There are plenty of other opportunities for moonshots elsewhere within the R and D ecosystem. ARIA’s sole purpose will be to look at how we can create paradigm shifts in technologies or, indeed, in technologies that do not even exist at the moment. I reference back to the UK being a founder member of CERN in 1983. We put £144 million a year into CERN now, so our spend on ARIA is quite modest by comparison. No one expected CERN to help to develop the internet or touch-screen computing, and yet they have been spin-outs as a result of prioritising discovery-led technologies and putting our faith in research, not knowing where it might lead us.
Other countries are doing the same. When we look at this discussion around ARIA, it is important to understand that it is not just about ARPA—and it is nothing to do with DARPA. Obviously, DARPA is a mission-oriented defence-led project. We focused our intention on the 1956 version of ARPA when looking at how to create ARIA. There is Vinnova in Sweden, which is £260 million a year; ImPACT in Japan; and SPRIN-D in Germany, which was set up in 2019 on exactly the same framework as we are looking at for ARIA. In a way, therefore, we are behind the curve. Other countries are already powering ahead, looking at setting up these disruptive innovation centres that will prioritise discovery-led technology, and we need to step up to the plate now.
When it comes to the Bill, I will make two final points. First, there is the issue around commercialisation. As I have mentioned, £800 million is a modest amount. We can supercharge that, just as we need to supercharge our 2.4% target by leveraging private investment. How can we do that? We can look towards prizes that have been established, such as the $10 million Ansari X Prize, which has leveraged $100 million. ARPA in the States also relies heavily on SRI International at Stanford University to help drive the spin-outs. We need to be cautious about not leaving an open door when it comes to focusing on the “R” in research and then forgetting about the “D”. This has been mentioned before, but what we do not want to see is discoveries coming out of ARIA being taken advantage of by other companies abroad. We need to look at how we protect the intellectual property. We need to look at how we can create an organisation that will focus on the “D”. I do not believe that Innovate UK has the capacity at the moment to be able to achieve that, so we need to look at the Fraunhofer in Germany, which spends 10 time the amount of investment than the catapult centres, for focusing on how we can look at applied level research for the future.
Then there is the issue of high risk. Yes, we need high-risk research, and yes, we must have the freedom to fail, but we must also understand the risk when it comes to collaboration with foreign powers, hostile research and making sure that we have the right security measures in place for dealing with research integrity and that we have trusted research partnerships. That is why it is exactly right that we have the FOI exemption in place to be able to protect this research and make sure that other countries do not take advantage of it.
Finally, it would be remiss of me, as a local MP, not to mention the location of ARIA. It is right that it should be practically a virtual location spread across the country, and we need to ensure that universities and national laboratories have the right investment to be able to help conduct the research for ARIA. When it  comes to the headquarters, the Bristol and Bath Science Park in my constituency has land that is free, and I am sure that it would give a very good rate if ARIA wished to set up there, right next to the National Composites Centre and the Institute for Advanced Automotive Propulsion Systems. It would be a huge opportunity if ARIA wished to locate in my constituency, which is only down the road from Chipping Sodbury—as the Secretary of State mentioned, the birthplace of the vaccine used by Edward Jenner.

Chris Green: It is a pleasure to follow my right hon. Friend the Member for Wokingham (John Redwood), who captured a number of key issues. He finished on the topic of national resilience, and there are so many areas in our economy and society in which we need to be more resilient. The covid crisis is a particular area of interest, but no doubt many other countries in the world and many organisations are looking at that. It may not be the opportunity on which the Advanced Research and Invention Agency might  want to focus. Many other people have focused on the idea of disruptive technologies, which might be particularly well fitted to what ARIA is there to do. Those are areas where industry or sectors have perhaps become complacent, with old, established technologies, and it is about making the next-generation leap forward.
The debate has rather lent itself to the idea of the Haldane principle, going back 100 years or so—to the idea of having a research-led approach that is therefore taken away from the direction of politicians. That approach would be natural and healthy and would complement the wider research, innovation and development ecosystem. I was reassured by what my hon. Friend the Member for Rugby (Mark Pawsey) said; after he had conversations with a couple of his local catapults, they said that they are not worried that ARIA might step on their toes. It is a natural complement to so much else of what the Government are doing. This championing of science, technology, innovation and invention is immensely important, and it ought to be very reassuring to businesses and other organisations seeking to invest in the United Kingdom, and ideally also companies seeking to reinvest from the UK and into the UK. It sends the message right across the world that we are ambitious—the global Britain idea that we are not looking inward and downward but out to the world.
That is part of the reason for our ambition by 2027 to take our R&D spend to 2.4% of GDP. That is a stepping-stone, not the end point of the ambition. The ambition is to get to 3% in the longer term, looking to emulate other countries around the world who do that, and to be competitive. To be in the position we want to be in and ought to be in, we need to be seeking to reach that next level of 3% R&D spend, and ARIA is a stepping-stone towards that.
Ultimately we want high-tech, innovative progress in the United Kingdom. That is not an end in itself. Universities and other organisations are not an end in themselves; they are great generators of wealth to improve our standards of living, but ultimately what people around the country will be focused on is having good jobs. We want people right around the country to be ambitious: to seek jobs in this sector, and to be studying physics and mathematics and all sorts of other subjects that will come into this territory for research and development, invention and innovation.
It will be interesting to see how in future ARIA works on that invention side of things with UKRI, which is still relatively new, to get those inventions into innovation and into businesses, and to create those works and those jobs of the future. We could go on to mention so many different topics from nuclear fusion to the next generation of batteries to satellites. There are so many sectors that involve artificial intelligence and life sciences, and so many of them are in the UK. We are already in a leading position and we have the opportunity to make that leap forward. We do not know what sectors will be around in 10 or more years’ time, but this is the ambition—this is the timeline, this is the vision for the future that ARIA has.
The SNP spokesman, the hon. Member for Aberdeen South (Stephen Flynn), started off with a war of words about where the headquarters will be, and he suggested it might end up being in London. I am sure it will not; I am sure there is a huge amount of competition around the country, and I thought my hon. Friend the Member  for Bolton North East (Mark Logan) made a compelling argument for Bolton. I am quite modest in my ambitions and would not demand that the headquarters be located in Bolton West; I will sacrifice my personal ambition for Bolton North East—or even Bolton South East. Where the headquarters ends up is incredibly important as it is part of the Government’s levelling-up agenda, but will my hon. Friend the Member for Derby North (Amanda Solloway), the science and innovation Minister, confirm that, wherever ARIA is based, it will be a collaborative organisation that will do so much for the United Kingdom?